1、Unit Five Inventory and Unit Five Inventory and Warehouse ManagementWarehouse ManagementPre-reading Discussion v 1.What are the inventories of a company?v 2.What are the roles that inventory plays in the supply chain?v 3.Explain the activities involved in warehousing.v 4.What are the differences bet
2、ween traditional warehouses and distribution centers?Introductionv 1Inventories are stockpiles of raw materials,supplies,components,work in process,and finished goods that appear at numerous points throughout a firms production and logistics channel.Inventories are frequently found in such places as
3、 warehouses,yards,shop floors,transportation equipment,and on retail store shelves.Having these inventories on hand can cost between 20 and 40 percent of their value per year.Assuming an annual inventory carrying costs is 20 percent,the annual inventory expense for an enterprise with MYM 1 million i
4、n average inventory would be MYM 200 000.Inventory Managementv 2Even though many strides have been taken to reduce inventories through justintime and quick response practices applied throughout the supply channel,the annual investment in inventories by manufacturers,retailers,and wholesalers is abou
5、t 13 percent of the U.S.Gross Domestic Product(GDP).Therefore,careful managing inventory levels make good economic sense.v 3Inventory exists in businesses and firms because of a mismatch between supply and demand.This mismatch is intentional at a steel manufacturer,where it is economical to manufact
6、ure in large lots that are then stored for future sales.The mismatch is also intentional at a retail store,where inventory is held in anticipation of future demand.v 4An important role that inventory plays in the supply chain is to increase the amount of demand that can be satisfied by having the pr
7、oduct ready and available when the customer wants it.Another significant role inventory plays is to reduce cost by exploiting any economy of scale that may exist during both production and distribution.v 5In an ideal world,no inventory would be required because manufacturers could exactly forecast d
8、emand and produce only that much.Unfortunately,the world is not perfect and forecasts are not accurate.Firms must produce and store additional stocks just in case to meet changing demand patterns.If firms could forecast accurately,many integrated logistics activities would be unnecessaryv or have li
9、ttle effect on integrated logistics cost.Most warehousing would vanish.Packaging would protect less because the product would move from the plant to the customer with minimal handling.Material handling equipment such as forklift trucks,cranes,and conveyors would not be required.v 6Inventory planning
10、 and management is one of the most important activities in integrated logistics,since inventory is spread throughout the supply chain from raw materials,work in process to finished goods that suppliers,manufacturers,distributors,and retailers hold.Inventory is a major source of cost in a supply chai
11、n,and it has a huge impact on responsiveness.For example,a clothing supply chain with high inventory levels has a high level of responsiveness,since a consumer can walk into a v store and walk out with the shirt he or she is looking for.In contrast,a clothing supply chain with little inventory would
12、 be very unresponsive.A customer wanting a shirt would have to order it and wait several weeks or even months for it to be manufactured,depending on how little inventory existing in the supply chain.Warehouse and Warehousingv 7Every firm must store its goods while they wait to be sold.A warehouse is
13、 such a facility providing for the efficient handling and storage of goods and materials in a planned space environment.Warehouses are typically viewed as temporary places to store inventory.There are an estimated 750 000 warehouse facilities worldwide,including professionally managed warehouses,as
14、well as company stockrooms,garages,self-store facilities,and even garden sheds.v 8In every logistics system,warehousing is an integral part of it.We can define warehousing as that part of a firms logistics system that stores products(raw materials,parts,workinprocess,finished goods)at and between th
15、e point of origin and the point of consumption.Warehousing plays a vital role in providing a desired level of customer service at the lowest possible total costs.Over the years,warehousing has developed from a relatively minor size of a firms logistics system to one of its most important functions.W
16、arehousing Activitiesv 9Warehousing activities involve receiving,transfer,storage,picking,and shipping.v 10Receiving activities may take place in railway station,dock,warehouse and so on.Before their entry into the inventory,the goods should be unloaded from the transportation carrier,and verified a
17、gainst cargo manifest,then inspected for damage or shortage.After they are accepted for storage,the inventory records should be updated.v 11Transfer involves physical movement of the goods into the warehouse for storage,movement to areas for specialized services such as consolidation,and movement to
18、 out-bound shipment.Many advanced handling equipments and facilities are used in this step.v 12Storage is a primary function of warehouse.Goods should be stored in areas with appropriate conditions.v 13Picking is conducted after orders are translated into picking slips in many instances.Each slip ad
19、vises warehouse operators to pick products into different customers desire.v 14Shipping is the last step.After properly packed and checked against delivery note,the products should be transferred to staging area and loaded on carrier equipment for transportation.Inventory records then are adjusted a
20、ccordingly.v 15Warehouses need information systems which are fast,flexible,accurate,working in real time on-line,capable of sorting information and presenting it where and when needed and with rapid response time,especially when they are to fit into a just-in-time process.Benefits of Efficient Wareh
21、ouse Managementv 16 Optimize warehouse layout.Warehouse management gives the flexibility to define the warehouse layout according to the changing needs,so business can achieve optimum warehouse efficiency.It can establish high-priority and lowpriority storage areas for optimum placement of goods.Thi
22、s block location helps to restrict movement of goods and divide the warehouse into zones to accommodate different storage needs such as temperature requirements or the rate of turnover of various items.In addition,company can either control how items are stored based on predefined location rules,or
23、have the flexibility to randomly manage item storage.17Increase warehouse efficiency.Warehouse management helps to use warehouse space efficiently by automatically identifying optimal storage locations for items,based on the characteristics of items and warehouse zones.All warehouse activities are r
24、ecorded in journals,so we can recreate a complete history of actions and item identifiers using an audit trail.Bar coding can be used to increase the speed and accuracy of picking and putting away of items.Companies can achieve faster picking and packing with good visibility into possible pick locat
25、ions from the shipment.And it can improve overall efficiency with internal transfers such as shipments which include bills of materialsto move items straight from the warehouse into production.v 18Increase customer satisfactions.Register goods arrive at the warehouse,so that they are visible through
26、out the system before they have been placed in inventory.Company can reserve items for customers,including items from a specific location,while entering a sales order.This reservation is recognized by all functions in warehouse management,such as inventory counts,planning of production and others,to
27、 help ensure that customer demands are satisfied.v 19Get a complete overview of inventory.In order to track items internally and throughout the supply chain,company can automatically have inventory stamped with a number linked to shipments and deliveries.For improved traceability,warehouse managemen
28、t lets you create as many serial or batch numbers for the automatic numbering of items as you require.Determine the exact location of a specific item in the warehouse with inventory dimensions.Inventory dimensions are also powerful tools to track serial and batch numbers and can be used to get a cle
29、ar overview of items in your warehouse.Distribution Centerv 20As a newly-emerged logistics link,distribution center is a large and highly automated warehouse designed to receive goods from various plants and suppliers,take orders,fill them efficiently and deliver goods to customers as quickly as pos
30、sible.There are some differences between traditional warehouse and distribution center.v 21Traditional warehouses are called storage warehouses for they store goods moderate for long periods,while distribution centers are designed to move goods rather than just store them.v 22As to the functions,tra
31、ditional warehouses provide few value-added services,while distribution centers emphasize assembly,packaging and other distribution processing activities.Again,traditional warehouses center focus on minimizing the operating cost to meet shipping requirements,while distribution centers focus on maximizing the profit margin to meet customers delivery requirement.v 23Nowadays,many warehouses tend to develop into distribution centers.
